Which of the following costs are always incremental and relevant in decision analysis?
A)Opportunity costs and sunk costs
B)Sunk costs and avoidable costs
C)Unavoidable costs and opportunity costs
D)Relevant costs and opportunity costs

Question

Quizplus · Accepted Answer

Relevant costs are costs that vary between alternatives being considered and are therefore incremental and relevant in decision analysis. Opportunity costs are also incremental and relevant as they represent the value of the best forgone alternative. Sunk costs are not incremental and avoidable costs may or may not be relevant depending on the decision being made.  Unavoidable costs are not necessarily incremental and relevant.

Which of the Following Costs Are Always Incremental and Relevant